IMF Concludes Visit to St. Kitts and Nevis

Mr. George Tsibouris, head of an International Monetary Fund (IMF) staff mission to St. Kitts and Nevis, issued the following statement today at the conclusion of the mission:

“An IMF team visited Basseterre during September 24 to October 5 to undertake the fourth review of the program under the Stand-By Arrangement (SBA) approved by the Fund’s Executive Board on July 27, 2011.

“The mission reviewed macroeconomic and structural developments and policies; assessed program performance at end-June 2012 under the SBA; and examined the outlook through the end of 2012 and the 2013 budget. All quantitative performance criteria were met at end−June 2012 despite the continued sluggish global economic activity. The structural benchmarks at the end-June 2012 were also met. Weaker imports and buoyant receipts from the Citizenship by Investment program reduced the external current account deficit and inflationary pressures abated further. The overall fiscal position through end-June 2012 was stronger than originally expected (and budgetary arrears were repaid) due to lower-than-expected capital outlays, and sizeable non-tax revenue and direct tax receipts which offset weaker indirect taxes. The growth outlook for 2012 has been downgraded from 0 to −0.7 percent, with a sharper contraction of construction than previously anticipated. However, real GDP growth is projected to recover to 1.8 percent in 2013 owing to Foreign Direct Investment projects in the pipeline.

“The policies and objectives of the authorities’ home-grown program, aimed at consolidating public finances and securing a sustainable path for public debt, will be the backdrop for the 2013 budget, currently under elaboration. In this context, the IMF mission supports enhancing tax revenue through continued reforms in revenue administration and broadening of the tax base, pursuing efforts to contain current expenditure and increasing public investment.

“The mission and the authorities discussed a draft memorandum of economic and financial policies through 2013. These discussions are expected to be concluded in the coming days. At that point, the mission would be in a position to recommend to the IMF Executive Board the completion of the fourth review under the SBA; the resulting Executive Board discussion could take place in November 2012.

“During the review, the mission held meetings with Prime Minister and Minister of Finance the Rt. Hon. Dr. Denzil Douglas, Premier Joseph Parry of Nevis, members of the Federal Cabinet and of the Cabinet of the Nevis Island Administration, senior officials of the Ministries of Finance and Sustainable Development, the Eastern Caribbean Central Bank (ECCB), and representatives of the private sector. The mission would like to thank the authorities for their excellent cooperation.”